Africa: Finally, Lessors Blacklist Nigeria on Aircraft Acquisition

Nigerian airlines will henceforth find it extremely difficult to acquire aircraft through leasing, except by outright purchase as THISDAY learnt that major aircraft leasing companies in the world have blacklisted the country.

The blacklisting was as a result of the failure of some indigenous airlines to return aircraft to lessors after they defaulted on the terms of the acquisition of the equipment.

THISDAY gathered from reliable industry sources that recent efforts by some domestic carriers to lease aircraft met a dead end as many of the lessors shunned the request while others gave outrageous conditions that could not be met by the operators.

The leasing companies may have decided to blacklist Nigeria after Top Brass, a charter service airline allegedly defaulted in leasing agreement with Seagold, Canada based lessor, which leased a Bombardier Q300 aircraft to the Nigerian carrier.

THISDAY learnt that efforts to recover the aircraft by Seagold was made difficult by Top Brass, which went to court to frustrate the recovery; until the Nigerian Civil Aviation Authority (NCAA) waded in and using the principle of the Cape Town Convention facilitated the Canadian company to recover the aircraft.

In reaction, Top Brass raised an alarm and accused Seagold of stealing the aircraft, which was deregistered by NCAA as a Nigeria aircraft and on arrival in Canada, was registered by the country’s civil aviation authority, Transport Canada.

The blacklisting was confirmed by the CEO of Aero Contractors, Captain Ado Sanusi, who noted that because of series of default by some Nigerian carriers, the lessors have decided not to lease aircraft to indigenous operators.

“Nigeria has reached to that point where there is subtle blacklisting. When a country is blacklisted there is no official letter written to you, telling you that you have been blacklisted. It is when you now go to the market to get these assets and you are turned down or you are given ridiculous and outrageous prices to discourage you from leasing the aircraft that you will know that your country has been blacklisted,” Sanusi said.

The Aero CEO said Nigeria domesticated Cape Town Convention (which enables commercial airlines to lease aircraft and other mobile assets without hindrances), in order to ease aircraft acquisition for Nigerian carriers, but one major condition for leasing aircraft was that in case of default or disagreement between the lessor and the lessee (the airline operator), the leasing company should be assisted to recover its equipment by the country’s government and civil aviation authority.

“The important thing is why did Nigeria domesticate the Cape Town Convention? The reason is so that Nigerian airlines can have easy access to acquisition of aircraft globally and we can pay our lease rentals as at when due.

“To give assurance to the owners of these assets, is that when they feel that there is default he can take back his airplane, his engine or whatever he has leased to you out of the country without any hindrance; be it from the regulator, be it from Customs or from the legal system. After that you can now start talking about the terms of the agreement and whether it was infringed upon,” Aero CEO explained.

The Director General of NCAA, Captain Muhtar Usman, recently raised an alarm and expressed the fear that the misconduct of some of the Nigerian airlines in defaulting leasing agreements with lessors might lead to the blacklisting of Nigeria.

The Director General singlehandedly took up the case of Seagold and made sure the aircraft was returned to the company in Canada in the effort to ensure that the Cape Town Convention principles were not breached.

“The aim of having the Cape Town Convention is to help, especially African airlines to be able to get leases easily and at affordable prices. Of course, it came with certain conditions because the people who are going to lease will always need to have some kind of comfort that if there is any default they will be able to recover their mobile equipment, aircraft, engine or anything along that line,” the DG NCAA had explained.

On the alleged stealing of the aircraft by Seagold, Sanusi said, “How in this day and age can anyone steal an aircraft when if you steal a phone you can be traced? If you steal a car from Europe to Nigeria, on arrival the car is demobilised.

“How can anyone steal an aircraft and fly it across Europe to Canada? It is not possible.”

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All Comments

Is ANYONE surprised? The ONLY surprise is that it’s taken this many years for the ‘lessors’ to learn how Nigeria commercial aviation is conducted and what a mess it is.

There are three dominant elements is the completely unprofessional conduct of Nigeria aviation.

1. No Nigerian airline has EVER produced a business plan. This means a REAL plan…not mental notes, wish lists nor comments from people who, also, have no expertise. A real plan with financial projections, objective cost projections, contingency plans, objective assessment of city-pairs, load factors, ticket prices, security and depreciation…and the myriad additional components of a PLAN.

2. The mindless selection of unqualified people to manage and operate the airline company. Airline operations are incredibly complex, constantly ‘fluid’, REQUIRING intense oversight in REAL TIME (not relying on what people are ‘telling you’ – inspect and evaluate yourself), money management, asset management (and constant vigilance of it’s status and location) NOTE: I have met several talented aviation people, and I concede there are ‘some’ capable people in Nigeria – unfortunately NONE of them are in senior management or in critical decision making positions. There are no airline CEO’s in Nigeria who have the entrepreneurship, vision, enthusiasm, courage, ethics, managerial acumen, knowledge of HOW AN AIRLINE CAN AND SHOULD OPERATE. Some possess a few requisite skills – but no person has all the skills needed to be the ‘boss’. There are no people in the Nigeria government with adequate skills to judge the performance of an airline.

3. Nigerian aspirations – inevitably are the dominant influence in the selection of airplanes. Airplanes CAN ONLY be selected and operated on routes, and in environments, that will generate enough revenue to PAY FOR THEM – not because they are large, prestigious, modern or ‘available with EASY payments’.
Airplanes must be matched to projected load factors, margins of profit, cost of maintenance (always predicated on the utilization of the aircraft), fuel consumption (remember the ‘business plan?)…and dozens of other factors which have DIRECT impact on PROFIT.

Starting small, building the business, conserving and accumulating CASH, training employees, expanding slowly, PAY AS YOU GO, manage the business with the same intensity as ‘brain surgery’ and KEEP THE AIRPLANES CLEAN, WELL MAINTAINED AND ALWAYS FULLY AIRWORTHY – is NOT the visible philosophy of Nigerian airlines. Nigerians want to launch airlines with brand new, expensive, large airplanes and excessive to the need.
They want to grow the airline at a pace which cannot be sustained, with money they don’t have and HAVE NO IDEA how they pay for them and THEN serve cities and airports that are prestigious and convenient for the government and executive decisions makers – but will not generate the revenue needed to keep the company going.

The new, proposed ‘national carrier’, NIGERIA AIR, is a foolish campaign. The degree of foolishness is GALACTIC. The figure of $132M (USD) that’s been publicized – is TEN TIMES MORE than needed to create and launch a modern, profitable and safe airline – BUT – it is one tenth of the amount needed to create and launch a bloated, ill-prepared, poorly staffed and poorly managed airline – in the fashion Nigerian promoters are talking about.